Oklahoma Alternative Fuel Vehicle (AFV) Income Tax Credit

For tax years beginning before January 1, 2020, Oklahoma provides a one-time income tax credit of 45% of the cost of converting a motor vehicle to operate on certain alternative fuels, or for 45% of the incremental cost of purchasing a new Original Equipment Manufacturer (OEM) AFV.

The state will allow an income tax credit of 10% of the total vehicle cost, up to $1,500, if the incremental cost of a new AFV cannot be determined or when an AFV is resold, as long as an income tax credit has not been previously taken on the vehicle.

Equipment used for conversions must:

be new and must not have been previously used to modify or retrofit any vehicle;

be installed by an alternative fuels equipment technician who is certified in accordance with the Oklahoma Alternative Fuels Technician Certification Act;

As pertains to the income tax credit, “motor vehicle” is defined as a motor vehicle originally designed by the manufacturer to operate lawfully and principally on streets and highways.

Additionally, Section 710:50-15-81 of the Oklahoma Administrative Code (Oklahoma Tax Commission Rules) states for purposes of the alternative fuel (clean-burning motor vehicle fuel property) credit, “motor vehicle” includes forklifts and other similar self-propelled vehicles. “Vehicle” shall not mean conveyor belts or other similar items. An entity that converts property to qualified clean-burning motor vehicle fuel property may lease such property and retain the right to claim the credit. Property on which the credit has previously been claimed is ineligible for the credit.

Alternative Fueling Infrastructure Oklahoma Income Tax Credit

For tax years beginning before January 1, 2020, the state provides a per-location Oklahoma income tax credit of 75% of the cost of equipment related to the delivery of certain alternative fuels into the fuel tank(s) of a motor vehicle and installation costs for certain alternative fueling infrastructure, not including a building and its structural components.

Oklahoma Zero-Emissions Facility Tax Credit

For tax years beginning on or after January 1, 2003, a state income tax credit is available to producers of electric power using renewable energy resources from a zero-emission facility located in Oklahoma. The zero-emission facility must have a rated production capacity of 1 megawatt or greater. The facility must be placed in operation after June 4, 2001, and the electricity must be sold to an unrelated party.

Eligible renewable energy resources include wind, moving water, sun, and geothermal energy. The construction and operation of the zero-emission facility must result in no pollution or emissions that are or may be harmful to the environment, as determined by the Department of Environmental Quality.

The amount of the credit varies depending on when the electricity is generated. Credits may be claimed for electricity generated on or after January 1, 2003, during a 10-year period following the date that the facility is placed in operation. For electricity generated on or after January 1, 2007, but prior to January 1, 2021, the amount of the credit is $0.0050 per kWh.

For credits generated before January 1, 2014, the tax credit is freely transferable at any time during the 10 years following the year of qualification. This includes transfers or sales from non-taxable entities to taxable entities and transfers or sales from one taxable entity to another.

For credits generated on or after January 1, 2014, the Oklahoma Tax Commission can refund the taxpayer 85% of the face value of the tax credits at the taxpayer’s request. The direct refund is available to all taxpayers including pass-through entities, but not nontaxable entities. Nontaxable entities will still be able to transfer or sell credits to taxable entities. If the taxpayer does not elect to receive a direct refund, excess credits can be allocated to one or more shareholders, partners, or members of the taxpayer entity.

Oklahoma Energy Efficient Residential Construction Tax Credit

A contractor who is the primary builder of an energy efficient home or manufactured home substantially completed after December 31, 2005 is eligible to claim an income tax credit beginning in tax year 2006. The home must be under 2,000 square feet. Improvements eligible for the credit include energy efficient heating and cooling systems, windows, doors, roofs, and insulation to minimize heat loss and gain.

The contractor can take a tax credit for the amount of the eligible expenditures, not to exceed $2,000 for a home that is between 20% and 39% above the International Energy Conservation Code 2003 or $4,000 for a home that is 40% or above of the Code. In addition, the heating and cooling efficiencies must meet the minimum requirements established by the National Appliance Energy Conservation Act of 1987 and building envelope improvements must account for a certain percentage of the reduced annual heating and cooling energy consumption levels.

The contractor can carryover any unused portion of the tax credit for up to 4 subsequent years. Credits earned after August 25, 2006, are freely transferable to any taxpayer upon the filing of a transfer agreement.

Disclaimer

The materials contained on this website have been prepared by the Oklahoma Department of Commerce for informational purposes only and do not constitute legal or tax advice. This information is subject to change based on judicial interpretation and legislative action. The application of the information is subject to your unique facts and circumstances. YOU SHOULD NOT ACT UPON ANY INFORMATION CONTAINED IN THESE MATERIALS WITHOUT SEEKING YOUR OWN PROFESSIONAL LEGAL AND TAX ADVICE.